DeFi’s Yield Guardians: The Role of Risk Curators

1.Background

DeFi’s breakout moment came during the “DeFi Summer” of 2020, as innovative token incentive mechanisms transformed passive users into active liquidity providers almost overnight. This model, using the issuance of governance tokens to incentivize users, quickly ignited market enthusiasm, bringing a new wave of interest in DeFi. While early implementations featured high yields that proved challenging to sustain long-term, these experiments laid the foundation for more sophisticated tokenomics and governance mechanisms that continue to evolve today..

After weathering a prolonged bear market throughout 2022 and 2023, the industry gradually shifted toward new yield models, emphasizing sustainable, protocol-native cash flows such as lending spreads and trading fees. By 2024, this narrative had become mainstream, signaling DeFi’s transition from an incentive-driven experiment to a more mature ecosystem focused on stable returns and real economic utility.

At the same time, yield sources have grown increasingly diverse and complex: new strategies such as real-world assets (RWAs), liquid restaking tokens (LRTs), perpetual funding rate arbitrage, and structured derivatives have emerged in rapid succession. This complexity has raised the bar for strategy design and made it difficult for average users to effectively manage or optimize yield across protocols on their own. In response, Vaults have emerged as a foundational solution: on-chain automated investment tools that package intricate strategies into a unified “deposit and earn” interface. By abstracting away operational complexity, vaults significantly lower the barrier to participation and pave the way for DeFi’s professionalization and large-scale adoption.

2.DeFi Yield Landscape

As the search for DeFi’s true product–market fit deepens, the sources of yield have become not only more diverse but also higher in quality. Yield generation now goes far beyond simple lending and has given rise to novel, often complex strategies that form the foundation of modern DeFi income.

In DeFi, yield rarely exists in isolation. Thanks to its highly modular “Lego-like” architecture, sophisticated users seldom earn from just a single source. Instead, they often unlock composite returns through multi-layered wrappers and strategy combinations. In the early stages, DeFi yield was primarily driven by basic mechanisms such as native staking, lending interest, and AMM-based liquidity provision. But as Ethereum transitioned to Proof-of-Stake and popularized liquid staking (LST), assets like stETH quickly became core collateral across the ecosystem, catalyzing a new wave of yield models.

Soon after, the market reached a new realization: “Where there is lock-up, there is opportunity.” Any locked asset could be deconstructed and reused as the starting point for another layer of yield. This logic led to the emergence of restaking protocols such as EigenLayer, and the subsequent explosion of Liquid Restaking Tokens (LRTs). These systems aim to retain the original yield source while layering on additional incentive mechanisms from new protocols, maximizing capital efficiency but also compounding systemic risk.

Parallel to this, another major thread in DeFi’s yield evolution has been “replication”: rebuilding traditional financial products and mechanisms on-chain. First came the order book DEXes, then innovations like GMX’s oracle-based perpetuals with point-to-pool pricing, allowing even retail users to “take the other side” and earn funding rates and trading fees. On-chain exchanges, options platforms, OTC desks, and even pre-market trading venues have since emerged, all driven by the same ambition: to replicate the infrastructure of traditional finance and build a fully on-chain financial empire for Web3.

At the forefront of this evolutionary path, a more radical trend is emerging: not only can traditional financial products be recreated on-chain, but the strategies themselves can now be tokenized. Ethena exemplifies this shift by building its stablecoin, USDe, around a basis trade—encoding the arbitrage between spot and perpetual markets directly into the protocol. This approach has sparked a new wave of imagination around complex, contract-based yield strategies on-chain.

Amid intensifying competition in the stablecoin landscape, the ability to offer sustainable and attractive yields has become a core differentiator for the next generation of protocols. It is within this context that Real World Assets (RWA) have rapidly gained traction, bringing off-chain yield sources on-chain to support both stablecoin stability and the broader DeFi yield infrastructure.

3.Vaults：PMF Generated from Yield

While the evolution of yield types and yield mechanisms has driven the professionalization of DeFi, it has also unintentionally raised the barrier to entry for everyday users. Adding to that, an increasing amount of traditional capital is beginning to flow into the crypto space. Although DeFi’s current penetration into TradFi remains limited, it’s becoming increasingly clear that as crypto goes mainstream, DeFi is likely to become the next major battlefield for capital competition. The challenge, however, is that while everyone sees the ocean of opportunity, only a few truly know how to swim in it.

From a user’s perspective, the reality is stark: yields are abundant, but the paths to access them are fragmented, complex, and often opaque in terms of risk. On-chain investors must either closely track strategy changes, gas costs, oracle volatility, and depegging events — or blindly trust protocols that appear “smart enough” to handle it all. This high cognitive and operational burden renders DeFi inaccessible to most retail users.

Against this backdrop, a clear direction has emerged: we need a mechanism that enables users to participate in sophisticated yield strategies without losing control, while providing asset isolation, automated management, and a baseline level of risk oversight. At this stage of the industry’s development, vaults have become the dominant answer proposed by many protocols.

Vaults are a widely adopted yield abstraction mechanism in the world of DeFi. Rather than referring to a specific protocol or product, a vault represents a general structure: users deposit assets into a vault, which then automatically executes one or more on-chain yield strategies. The resulting returns are distributed proportionally to depositors. You can think of a vault as a decentralized on-chain yield fund.

The defining feature of vaults is their ability to abstract away operational complexity. Users only need to perform a single deposit action to gain indirect exposure to a wide range of sophisticated strategies. In return, they benefit from features like auto-compounding, risk isolation, and efficient capital allocation. This model has been applied across a variety of DeFi verticals, such as:

Lending — Morpho exemplifies how vaults enhance capital efficiency for borrowers. On Morpho, users don’t lend directly into isolated markets via the frontend. Instead, they deposit funds into a vault, which is managed by a strategy curator that allocates capital across lending markets according to predefined logic and market conditions. Borrowers then interact with the markets the vault has deployed funds into.

Perpetual Contracts — Starting with GMX’s GLP and followed by more active vault-based strategies like those on Drift, vaults have enabled a new model of trading distinct from orderbook-based exchanges. Here, users deposit capital into a vault contract that acts as the counterparty to traders, essentially forming the liquidity pool against which perpetual contracts are executed. Liquidity providers in these vaults earn trading fees and absorb trader losses, all without needing to actively manage positions.

Restaking — Symbiotic uses vaults to encapsulate the complexity of restaking economics. As a restaking protocol, Symbiotic positions vaults as bridges between capital and decentralized security services. Users deposit assets into vaults, which then perform risk assessments and allocate funds to validator nodes or AVS networks. The rewards generated by the network are funneled back to vault depositors.

4.Unpacking the Role of Curators

While vaults often automate the execution of on-chain strategies through code, one critical question remains: Who designs and manages those strategies? This is where curators come in. A curator is a professional entity — often a team of experts, a specialized company, or a DAO — that is granted permissioned control over the vault’s strategic direction and risk parameters.

Curators are responsible for the intellectual heavy lifting behind the vault: conducting due diligence on underlying protocols, designing yield strategies, setting risk parameters, and managing the portfolio as market conditions evolve.

You’ll often see the presence of risk curators in lending protocols like Morpho and Euler, where strategy oversight and risk calibration are essential. At OneKey DeFi, we also integrate with third-party risk curators for our Morpho-based vault products, ensuring that even simplified DeFi entry points come with robust, expert-led risk management infrastructure.

According to data from DefiLlama, the total value locked (TVL) managed by curators has grown from virtually zero to over $7 billion in less than a year, and continues to rise rapidly. While you might not consciously notice the presence of curators when interacting with DeFi protocols, the data tells a different story: their role is becoming increasingly pivotal in strategic outcomes on-chain.

5.How Curator works: Taking Gauntlet as an example

Let's take Gauntlet, the largest curator by TVL, as an example to uncover the mystery behind this role.

Similar to OneKey, a significant portion of Gauntlet-curated vaults are on Morpho. So, first, let's understand the structure of the Morpho protocol:

From the perspective of fund flow: First, users supply funds into vaults set up by Gauntlet. Afterward, user funds are allocated to various lending markets on Morpho based on Gauntlet’s curation methodology. Funds are borrowed by borrowers, which generates interest, and the generated yield will be reflected in the initial vault's APY. Importantly, DeFi vaults are non-custodial, and users retain control of their assets.

Therefore, for Gauntlet, how to allocate supply is the most crucial aspect. Typically, three types of operations by Gauntlet affect their performance:

• Adding New Markets: Integrating new lending markets to influence the overall vault APY.
• Adjusting Configurations: Regularly optimizing asset allocation across different markets to balance risk and return.
• Setting Market Caps: Establishing capacity limits for each market to control risk concentration.

What determines these operations? For Gauntlet, various factors are considered, including:

• DEX Liquidity: Assessing trading depth on DEXs to determine the maximum trading amount within an acceptable slippage range.
• Volatility: Judging the volatility of collateral and borrowed assets and their correlation using historical data.
• Slippage: Ensuring that liquidators do not suffer significant slippage losses when liquidating collateral.
• Audits: Prioritizing collateral assets that have undergone multiple audits.
• Oracles: Ensuring oracles are decentralized and resistant to manipulation.

Based on these factors, Gauntlet has designed a variety of vaults to meet the needs of different risk profiles. For instance, Prime vaults focus more on security and blue-chip assets, Core vaults aim for more diversified returns.

6.Future outlook

DeFi’s complexity will only continue to grow, and user-friendliness will remain the key barrier to overcome. The ability to hide complex strategies behind a simple user interface will determine who can truly serve the next wave of users. At the same time, as yield structures become more sophisticated and diversified, the role of the risk curator will become increasingly important — not as a protocol builder, but as a strategy architect: someone who filters, composes, and packages high-quality strategies into trusted products for everyday users.

At OneKey DeFi, we share a similar mission with risk curators: to help users access real on-chain yield in a secure, transparent, and frictionless way—opening the door to DeFi’s next phase of adoption.

About OneKey

OneKey is a top 3 global hardware wallet brand trusted by crypto users for its uncompromising security and ease of use. Founded in 2019, OneKey is a leading open-source hardware & app wallet, backed by YZi Labs (formerly Binance Labs) and Coinbase Ventures — OneKey is the only hardware wallet endorsed by both.

Audited by SlowMist, OneKey is committed to uncompromising security: air-gapped signing, EAL 6+ secure chips, and a seamless app experience (supporting 60+ chains across mobile, desktop, browser, and web).